Paris, Feb 19 (PTI) In a clear signal that it is notwilling to join the US-China currency war, India today saidthe foreign exchange adjustment is best be left to thesovereign governments.
Underlining that currency rates should be driven bymarket forces "as far as possible", Finance Minister PranabMukherjee said "the best course would be to leave it tosovereign governments to decide what course of action theywill take. We take that position".Mukherjee''s comments at the G20 Finance Ministers''meeting here comes against backdrop of the US pressurisingChina to revalue its currency yuan.
"At the same time every country has its own problems andthey will have to address those issues. You cannot sit onvalue judgement from outside," Mukherjee said.
His remarks quashes speculations that India might joinBrazil and the US to pressurise China to revalue yuan.
The foreign exchange value of yuan is not determined bymarket forces. It is alleged that an undervalued yuan leadingto global trade imbalances as Chinese exports are becomingcheaper.
Fred Bergsten, the Director of the Peterson Institute forInternational Economics, estimates that a 20-40 per centappreciation of yuan would result in a USD 100-150billion improvement in the US trade deficit and would generate700,000 to 1 million jobs in the US.
Recently, a new legislation was introduced in the USSenate that provides additional tools for the administrationto address currency manipulations by countries such as China.
The proposed law would ensure the Federal government isequipped to respond on behalf of American workers andmanufacturers by imposing countervailing duties on subsidisedexports from countries like China.
US Senator Sherrod Brown recently said that "China''scurrency manipulation creates a substantial cost advantage forChinese manufacturers over American manufacturers".